It is the easiest to create a new brand in a new industry or a new consumption habit in the growth stage.
This report was jointly released by the wing capital focusing on the new economy & new consumer investment and the whip cows focusing on the new consumer industry.
It is the easiest to create new brands in new industries or new consumption habits in the growth stage, such as e-cigarettes, sweepers, coffee, etc. It is more difficult to brew new brands from traditional industries. The precipitation time will be very long. The change in the marketing model of new consumer brands is fundamentally due to changes in the group: on the one hand, more entrepreneurial teams with Internet backgrounds have entered the consumer industry and changed the supply logic; on the other hand, the consumption of the “Z-era” 18-35 years old Changes in perceptions and behaviors have brought about changes in demand.
First, the brand strategy of the economic downturn
According to McKinsey’s research report, during the five recessions in US history, the optional consumption was affected by the recession for the longest time, because consumers will reduce their expenditures before the recession, and confirm Expenditure will only be expanded after the arrival of prosperity (the recession has long since ended); in contrast, essential consumption is almost unaffected by the economic macrocycle.
Therefore, the biggest investment opportunity in the consumer industry during the economic downturn is that there is a segmentation in the optional consumption that has a higher anti-cyclicality and a higher growth rate than the overall growth rate of the industry – that is, a consumer brand that is positioned at a high cost performance. It is also the concept of “consumption grading”.
Value-effective consumption has some attributes that must be consumed for the simple reason that a recession is often accompanied by inflation, and consumers with lower income and income expectations have to “reduce consumption” and “consume consumption and maintain consumption”. make a choice. Therefore, in the industry selection of new consumer brands, the entrepreneurial space of the consumer industry such as dairy, meat products, beer, convenience foods and soft drinks is relatively small, while in tobacco, alcoholic beverages, electronic products, clothing, home appliances and other consumer products. The possibility of a new brand is higher.
The existing brands have many advantages and there is also a heavy burden of restructuring and transformation. For example, one of the most favorite things for consumer goods companies in the boom period is to extend products and services to extend products and services. Some even Thoroughly clear the boundaries with the mass market to pursue higher profit margins, such brands are difficult to successfully transfer to the low-end market in a short period of time, and the brand image of high cost performance is difficult to stand. The new brand can directly target the cost-effective market for brand building, and the refining brand is the only bridge to enter this market. In the period of economic recession, the establishment of new consumer brands first needs to judge the trend and mode from the perspectives of “time of day”, “land profit” and “human harmony”:
1) Day time:
Brand positioning during the economic downturn. During the recession, the most important consumer groups -Distribution, the loss of control of channel management leads to dealers’ interests above the brand’s interests, thus forming a distorted brand portfolio, making profits far below optimal levels. Such companies lack the awareness and ability to face the ultimate consumer, entrusting the hardest and most profitable links to dealers. In fact, the ability of the consumer goods company to communicate with the final consumer determines the profitability of the product. The extent to which the consumer goods company directly faces the consumer determines the proportion of the company’s distribution in the value chain.
In the boom period, due to the rapid growth of the consumer market, almost all marketing mix strategies can bring profits to the company.” Many companies not only outsource marketing or even entire sales.
In the recession, there are fewer and fewer marketing strategies that can bring profits to the company, the overall profit cake shrinks, and the interests of all the partners, including the planning company, media, distributors, and retailers. The distribution pattern must be adjusted or even reinstated. This redistribution sometimes means a major adjustment in the business model and even a reshaping of the supply chain, which can have disastrous consequences. In the implementation process, the outsourcing company can not respond quickly to the dramatic changes in the market and consumers. When the change is realized, the loss may have been caused. Therefore, the economic downturn will have higher requirements for brand management capabilities of new brands, especially for marketing.
Second, the marketing strategy of the new brand “three steps”
Compared with the production industry, the essential difference in the consumer industry is that business growth is driven primarily by marketing expenditure rather than productive investment. The essence of competition in the consumer goods industry is competition for premium sales capability rather than cost control; competition in the consumer goods industry relies on strategic management of marketing expenditures (mainly sales expenses) rather than strategic management of capital expenditures (financial expenses). Even for mergers and acquisitions that require capital expenditures, the real target of purchases is intangible assets such as brands and networks rather than tangible assets.
Because the revenue share growth in the consumer goods industry is driven by the share of sales expenses and marketing efficiency, the marketing model of consumer goods companies can be divided into three categories based on the correlation between expense share and revenue share: exposure-driven, brand Drive and 3D drive, three types of marketing correspond to the three stages of consumer enterprise development: standardization, scale and branding. Standardization is the foundation of enterprise establishment. The marketing strategy adopted in the scale stage is driven by exposure, and the branding stage The marketing strategy is based on brand-driven 3D drivers. The marketing model of consumer brands usually evolves from “visibility-driven” to “brand loyalty-driven” and then “3D-driven”.
1) Exposure drive.
Exposure-driven enterprise revenue share growth is entirely dependent on the increase in sales expense share, which often exceeds revenue share growth.
The homogenization characteristics of such enterprises are more obvious. The effect of mass media advertising and the effect of distribution are very significant. There is a high correlation between the expenditure of sales expenses and the growth of performance, due to the huge competition caused by homogenization. The pressure of “commoditization” makes it difficult to increase the value of business or even a long-term decline. The growth of revenue share is the main driver of profit share growth. Visibility-driven models are common in beer, soft drinks, snack foods, dairy products, and meat. Products, health products, etc.
“Exposure-driven” is a mode of rapid expansion that is difficult to sustain. The best examples are melatonin, ginseng and Chinese dairy. When the growth of revenue share begins to shake off the increase in sales expense share and gradually transition to “brand-driven”, it means that the evolution of marketing strategy has begun.
2) Brand-driven.
The growth of brand-driven company’s revenue share does not depend on the growth of sales share. It is common in the consumer goods industry such as tobacco and alcoholic beverages. Usually there are sensory differences between products and competing products in such industries, but it is difficult to clearly evaluate products. The psychological attributes are far more important than the functional attributes. Once the habits are difficult to change, the cost of implementing brand conversion is high. In these industries, the marketing tools and strengths of the core target consumers are crucial.
There is no obvious correlation between the sales expense share, the management expense share and the income share of such enterprises. The actual increase in revenue share is actually the share of the core consumers in the market segment occupied by the product brand of the enterprise. “This is actually the core of Maotai’s success.”
As the company’s revenue share growth gradually gets rid of the correlation with the cost share, and even with the decline in the cost share, it is a sign that the company has evolved from exposure-driven to brand-driven. As can be seen from the figure below, Luzhou Laojiao’s revenue share increased in 2015, surpassing the sales expense share growth, which is the performance of brand loyalty improvement. Consumers do not need to persuade too much to make purchase decisions (put a large number of advertisements and promotions) ).
But “brand-driven” is not the end of evolution. Brand premiums will attract a large number of competitors to erode the market. Companies with brand loyalty must further segment the market and deepInto understanding consumer needs, providing mass customization and even one-to-one services, this is the “3D driver” for Design, Develop and Delivery.
3) 3D drive.
3D is the abbreviation of Design, Develop and Delivery. The design here also includes the design of brand image and brand identity. We believe that 3D drive mode mainly depends on management fees rather than sales expenses. Achieve scale expansion (management costs include R&D and human resources expenditures). 3D drive mode is common in the prescription drugs, software and consumer electronics industries, and clothing, footwear, home appliances and other consumer industries are also 3D-driven industries.
For the 3D-driven industry, consumers can clearly perceive the differences in functionality, appearance, and price/performance of these products, and the product appeal is far greater than the brand appeal. Product innovation capability is an important driving force for revenue share growth. The product life cycle is extremely short, and new product revenue accounts for a large proportion of revenue. Successful new product development brings higher profit margins for distribution in all aspects of the channel. 3D-driven companies with strong innovation capabilities have strong bargaining power over channels, while companies with insufficient innovation often face frequent channel conflicts.
The fundamental difference between 3D drive mode and visibility drive mode is that the visibility required by 3D drive companies is not mainly from advertising and promotion. For example, iPhone has almost no need for advertising expenses, there are a lot of free publicity reports and word-of-mouth communication, and customers. The power also gives Apple a strong channel negotiation capability and a high premium level. Such companies do not rely on the expansion of sales expenses to achieve scale expansion. Due to the backwardness of technology, creativity and management, examples of real 3D drive models in domestic consumer goods companies are still rare.
The 3D drive is actually an upgraded version of the brand loyalty-driven model, which can also be called “customer loyalty drive”, because the main force driving brand expansion is no longer a business but a customer. A simple way to distinguish:
How high is the “weird sensation” in the minds of consumers when the brand launches another new product? For example, Apple’s launch of iMac, iPod and iPhone, the psychological feelings brought to consumers are generally consistent, the brand accumulation of a series of products is still effective in the next series of products, so the possibility of inertial purchase behavior is higher, in fact A considerable proportion of people own more than 2 apple products; if Moutai launches a new wine brand, the first feelings of consumers will be very different, so “brand-driven” companies need to expand the product line horizontally. The investment is equal to the cost of sales established by a new brand. Alcohol and tobacco companies basically focus on a certain area for vertical product configuration and almost no multi-category.
Sure, the 3D-driven marketing model still needs a lot of visibility.The branding of the brand is also through the above stages. Although the brand power of high-end liquor is caused by many irrational factors, such as “cultural attributes” (face culture, wine table culture, etc.), the cost advantage does not make much sense in the industry competition. But its development core is still the same. Moutai’s brand building has experienced three stages:
1) Standardization of the brewing process to ensure stable wine quality. The brewing process of liquor seems simple, but it is very difficult to maintain high quality and stable wine production. The brewing process of Maotai has been gradually standardized in the exploration for decades, the liquor yield has been improved, and the quality of the wine has been stabilized.
2) Capacity expansion and occupation of market share. The 1990s was the golden age of liquor development. Liquor products were in short supply, and liquor companies that could expand their production naturally gained a higher market share. Therefore, Shanxi Liquor and Wuliangye have become the industry leaders. Since its listing in 2001, Maotai has accelerated its capacity expansion and achieved a 10,000-ton plan in 2003, laying a foundation for the brand’s continued improvement.
3) Positioning is accurate, and the “national wine Maotai” brand is stable. Maotai, which is targeting high-end wines, has applied for the “National Wine” trademark since 2001 and continues to market. In 2008, the ex-factory price of Maotai was higher than that of Wuliangye for the first time, which became a landmark event for Maotai to establish its status as “national wine”. Although the “national liquor Maotai” has been banned by the National Trademark Review and Adjudication Board in 2018, Maotai has been in the name of “national wine” for nearly 20 years, and the status of “national wine” has already been deeply rooted in the hearts of the people.
From the perspective of marketing model, the liquor industry is a typical brand-driven industry, and this feature has also been clearly reflected in Maotai’s business data. From the establishment of Moutai to the completion of the “10,000-ton plan” in 2003, the marketing of Maotai in the early stage was mainly driven by exposure. The sales expenses accounted for a higher share of the total sales expenses of the industry than the share of operating income; after four years of brand precipitation in 2004-2006 And marketing transformation, after 2006, Maotai’s operating revenue accounted for the total revenue of the industry was always higher than the sales expense share. Maotai officially entered the “branding” stage, and revenue growth no longer relied on the growth of marketing investment, but entered a more stable and benign In the brand development stage, the brand value of “Moutai” has been continuously pushed up in the capital market, and the turning point of the market value is basically consistent with the switching point of the marketing model.
